Question

At market equilibrium, which areas represent producer surplus (PS)?

1) Above the market price and below the supply curve
2) Below the market price and above the demand curve
3) Above the market price and above the supply curve
4) Below the market price and below the demand curve

Answer 1

At market equilibrium, producer surplus is represented by the area above the market price and supply curve.

Step-by-step explanation:

The areas that represent producer surplus (PS) at market equilibrium are 3) Above the market price and above the supply curve. Producer surplus is the amount that a seller is paid for a good minus the seller's actual cost. In this case, it is the area between the market price and the segment of the supply curve below the equil